U.S. Chamber Lobbies to Weaken Anti-Corruption Law

Even as anger over governmental corruption has exploded into protests across the Middle East, the U.S. Chamber of Commerce has been working to weaken the law that bans companies from bribing foreign officials.

U.S. Chamber of Commerce Headquarters

That effort, which has been going on for months, recently got ratcheted up when the Chamber hired former U.S. Attorney General Michael Mukasey to lobby specifically on “possible amendments to the Foreign Corrupt Practices Act,” according to Mukasey’s lobbying registration document. The FCPA, passed in 1977, prohibits U.S. companies and foreign companies whose securities are traded on U.S. exchanges from paying bribes to foreign officials.

The U.S. Chamber’s Institute for Legal Reform, in a report last fall[PDF], said that both the Justice Department and the Securities and Exchange Commission had become “increasingly aggressive in their reading of the law” within the last decade, bringing more FCPA enforcement actions than ever, netting higher fines and filing more cases against individual company employees.

The Chamber of Commerce argues that aggressive enforcement of the anti-bribery law makes U.S. businesses less competitive than their foreign counterparts, though the law also applies to some foreign companies. The Chamber is pushing for Congress to make changes to the law, such as defining “foreign official” and requiring “willfulness” for corporate criminal liability.

Butler University Assistant Professor of Business Law Mike Koehlerused to represent clients facing FCPA charges. He told me he agrees with some of the Chamber’s objections, but doesn’t think it needs a legislative fix.

The law is fine, Koehler told me. But the Justice Department and SEC “are continuing to push the envelope” with enforcement, applying the law in ways that Congress didn’t originally intend. One example of that, he said, is that about 60 percent of current FCPA cases involve payments made to employees of state-owned or state-controlled companies. Those people shouldn’t be considered “foreign officials,” he said.

Koehler said his main issue with FCPA enforcement is that the allegations are almost never subject to judicial scrutiny because these cases always settle. Asked why this is, given that most defendants are giant multinational companies with enough resources to take the corruption charges to court, Koehler said that the “the cost of aggressively mounting a legal defense based upon the statutes, elements, and facts of case are too risky.”

Mark Mendelsohn—formerly the Justice Department’s chief FCPA enforcer and now in private practice—told The Wall Street Journal last week that he expects current enforcement trends to continue. He cited the Mideast protests as part of a “growing recognition of what people commonly call the corrosive effects of corruption on development and democracy and democratic institutions.”

The U.K. is currently finalizing its own anti-bribery law, which would seem to address the Chamber’s objections about an uneven playing field. The Chamber, however, writes in its report that U.S. authorities may try to apply even more pressure to companies “so as not to be outdone” by Britain in the area of anti-corruption enforcement.

Photo by NCinDC via Flickr

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